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Yields on gov’t debt end lower

YIELDS on government securities (GS) went down last week as Philippine inflation eased in June and as US data released last week led to renewed Federal Reserve rate cut bets.

GS yields, which move opposite to prices, fell by an average of 6.33 basis points (bps) week on week, according to data from the PHP Bloomberg Valuation Service Reference Rates as of July 5 published on the Philippine Dealing System website.

Rates at the short end were mixed, with the 91- and 182-day Treasury bills (T-bills) going down by 2.81 and 3.66 bps to yield 5.7152% and 5.9669%, respectively. Meanwhile, the yield on the 364-day paper went up 1.07 bps to 6.0848%.

At the belly of the curve, yields went down across all tenors. The two-, three-, four-, five-, and seven-year Treasury bonds (T-bonds) dropped by 5.24 bps (to 6.2053%), 7.19 bps (6.2434%), 8.22 bps (6.2888%), 8.73 bps (6.3425%), and 10.28 bps (6.4364%), respectively.

Lastly, at the long end, the rates of the 10-, 20-, and 25-year debt papers declined by 14.19 bps (to 6.5116%), 4.77 bps (6.7718%), and 5.61 bps (6.7557%), respectively.

GS volume traded rose to P32.15 billion on Friday, up from P25.17 billion the previous week.

Yields on government debt mostly went down last week on expectations of slower June headline inflation, Jonathan L. Ravelas, senior adviser at Reyes Tacandong & Co., said in a Viber message.

“Since the market has been anticipating this, yields moved lower. However, we also observed profit taking at [Friday’s] levels as some issues are already back to April levels,” a bond trader likewise said in a Viber message.

Philippine headline inflation eased to 3.7% in June after four straight months of acceleration due to a slower rise in electricity and transport costs, the Philippine Statistics Authority reported on Friday.

The consumer price index (CPI) rose to 3.7% year on year in June, easing from 3.9% in May and 5.4% in the same month a year ago.

This fell within the Bangko Sentral ng Pilipinas’ (BSP) 3.4-4.2% forecast for the month and was slightly slower than the 3.9% median estimate in a BusinessWorld poll of 14 analysts.

This also marked the seventh straight month that the CPI settled within the BSP’s 2-4% target band.

The June print was the slowest pace in four months or since the 3.4% clip in February. It also matched the 3.7% print in March.

For the first six months of 2024, headline inflation averaged 3.5%, slightly faster than the central bank’s 3.3% full-year forecast but still well within its annual goal.

BSP Governor Eli M. Remolona, Jr. earlier said that the Monetary Board is “on track” to deliver its first rate cut in over three years at its Aug. 15 meeting as they expect inflation to continue easing this semester.

The central bank may cut by 25 bps in the third quarter and another 25 bps in the fourth quarter, the BSP chief added.

Data out of the US last week also caused GS yields to decline as these boosted bets of a Fed rate cut within the year, the trader added, which also increases the likelihood of the BSP kicking off its easing cycle as planned.

US employment increased solidly in June, but government and healthcare services hiring made up about three-quarters of the payrolls gain and the unemployment rate hit a 2-1/2-year high of 4.1%, pointing to a slackening labor market that keeps the Federal Reserve on course to start cutting interest rates soon, Reuters reported.

The Labor Department’s closely watched employment report on Friday also showed the economy created 111,000 fewer jobs in April and May than previously estimated, suggesting the trend in payrolls growth was slowing.

When added to the moderation in prices in May, the report could boost Fed policy makers’ confidence in the inflation outlook after the disinflationary trend was disrupted in the first quarter. Financial markets expect the US central bank, which aggressively tightened monetary policy in 2022 and 2023, to start its easing cycle in September.

Nonfarm payrolls increased by 206,000 jobs last month, lifted by government hiring, the Labor department’s Bureau of Labor Statistics said. Economists polled by Reuters had forecast payrolls would increase by 190,000 last month, with the unemployment rate unchanged at 4%.

Traders of federal funds futures saw a roughly 77% probability of a rate cut at the Fed’s Sept. 17-18 meeting, according to CME Group’s FedWatch tool. Traders are also pricing in a rising chance of a second rate cut in December.

The Fed has maintained its benchmark overnight interest rate in the current 5.25%-5.5% range since last July. The minutes of the central bank’s June 11-12 meeting, which were published on Wednesday, showed policy makers acknowledged the economy appeared to be slowing and that “price pressures were diminishing.”

The ADP employment report and weekly jobless claims last week also signaled easing labor market conditions, while a measure of services sector activity dropped to a four-year low and factory orders slumped unexpectedly.

Yields may continue to move sideways to down in the near term on expectations of lower borrowing costs here and in the US, Mr. Ravelas said.

“The market will need more catalysts to warrant further downside in yields,” the bond trader added. — K.K.P.D.Mendoza with Reuters

JFC shares climb following acquisition in South Korea

SHARES in Tony Tan Caktiong-led Jollibee Foods Corp. (JFC) rose last week following a disclosure of its acquisition of a majority stake in South Korean brand Compose Coffee.

Data from the Philippine Stock Exchange showed that a total of 2.71 million shares worth P623.46 million were traded from July 1 to 5, positioning JFC as the 10th most active stock in the local market during that period.

JFC shares increased by 3.5% week on week, closing at P234 per share, up from P226 per share on June 28.

Year to date, JFC’s share price has decreased by 6.9%.

Philippine National Bank Senior Equity Research Analyst Jonathan J. Latuja said in an e-mail that Jollibee’s share price was up by more than 3% last week, which was a continuation of its ascent since the previous week.

“Excitement about the acquisition of the Korean brand, Compose Coffee, was positively received by the market, which drove Jollibee stock price higher. Compose Coffee could be earnings accretive,” said Mr. Latuja.

“This looks bullish as they are expanding their presence one country at a time. With the new acquisition, valuation will surely increase since it will add value to their current portfolio,” Jeff Radley C. See, head trader at Mercantile Securities Corp., said in a Viber message.

In a disclosure last week, JFC announced that its wholly owned subsidiary, Jollibee Worldwide Pte. Ltd. (JWPL), acquired a 70% stake in Compose Coffee Co., Ltd. and its roasting facility, JMCF Co., Ltd., collectively referred to as Compose Coffee, for $340 million (approximately P20 billion). This acquisition aims to strengthen JFC’s coffee and tea business.

Private equity firm Elevation Equity Partners Korea Ltd. will get a 25% stake while Titan Dining II LP (Titan Fund II) will have the remaining 5%.

Jollibee has a 90% participating interest in Titan Fund II through JWPL. The deal was finalized after the signing of definitive agreements.

With the acquisition of Compose Coffee, Jollibee expects a 2% increase in revenues, bringing the international business’ contribution to 41% of global revenues.

Jollibee’s attributable net income in 2023 amounted to P8.77 billion, up by 16% from P7.56 billion in 2022.

Its revenues increased by 15.2% to P244.11 billion in 2023 from P211.9 billion previously.

Jollibee saw a 26.9% increase in its first-quarter attributable net income to P2.62 billion as system-wide sales grew by 10.4% to P86.83 billion.

Mr. Latuja projected a year-on-year revenue growth of 12%.

Mr. See identified support levels at P230 and PHP224 per share, with a resistance level at P240 per share.

The company expanded its store network by 5.3% to 6,886 stores as of the end of March, comprising 3,337 stores in the Philippines and 3,549 international branches. — Lourdes O. Pilar

How much did each commodity group contribute to June inflation?

Headline inflation eased to 3.7% in June after four straight months of acceleration due to a slower rise in electricity and transport costs, the Philippine Statistics Authority (PSA) said. Read the full story.

How much did each commodity group contribute to June inflation?

Style (07/08/24)

Careline offers Spongebob-inspired makeup

SPONGEBOB SQUAREPANTS’ birthday — at least according to his driver’s license in Season 1 Episode 15a “Sleepy Time” — is on July 14, and Careline Cosmetics is celebrating the event along with the rest of Bikini Bottom. From July 1 to 31, Careline offers a 25% discount on all Spongebob Squarepants x Careline merch, including Careline Best Blush Ever Powder Blush (in four shades). This powder blush is packed with Vitamin E, and is up for grabs at P187.50 (originally P250). The Careline Oh Puh-Lips can be worn solo, under lipstick, or as a topper, for P243.75 (originally P325). The lightweight formula comes in five shades with a vanilla scent, and leaves a long-lasting stain. The Careline Tinted Lip Gloss (in three shades) comes in Bikini Bottom floral packaging, and has a lightweight consistency (available for P243.75 during the sale, from P325). Then there is the Careline BFF Liner Gel and Liquid Liner, with a waterproof and smudge-proof gel eyeliner and a liquid pen, priced at P243.75 (from P325). Finally, there’s the Careline Aye Aye Mascara, that lasts up to 36 hours without budging. The curved-fanning brush makes application a breeze (priced at P243.75, was P325). The discounted Careline products are available through Shopee, Tiktok, Lazada, Robinsons Department Stores, Watsons, and SM Department Stores.

Sweet-smelling sleep

PERSONAL COLLECTION, a Filipino-owned direct selling company, recently unveiled White Dove Sweet Lullaby, a sweet and comforting new scent for babies that comes in powder, lotion, wash, and shampoo. White Dove Sweet Lullaby has notes of fresh apples and citrus fruits, blended with the scent of sweet roses and peonies. It’s gentle and safe for baby’s skin and is hypoallergenic and dermatologically tested. The baby wash and baby shampoo are made with natural milk protein extract to keep hair soft and skin moisturized, and are tear-free and gentle on the eyes. The lotion is made with a triple moisture formula with pentavitin and natural milk protein extract, providing up to 48-hours of hydration. Complete this nighty-night routine with the powder, enriched with natural milk protein extract. Its sterilized talc absorbs moisture and features a barrier to repel dampness, while its sun-protective formula shields the skin from harmful rays of the sun. White Dove Sweet Lullaby products are available on Shopee and Lazada.

Lipstick sale at Watsons and SM

JULY just got a whole lot more colorful with deals happening all month long at Watsons and SM Beauty Department Stores. Watsons and SM Beauty are celebrating everything lipstick, especially on Lipstick Day (July 29), with 50% off on a wide range of brands and products. Participating brands include Ever Bilena, Careline, Spotlight, and Hello Glow. This offer runs from July 4 to July 31. The sale is available in Watsons and SM Beauty stores nationwide, but also on Watsons online.

Kenzo goes sci-fi for F/W 2024

FOR THE Kenzo Fall-Winter 2024 Women’s and Men’s Pre-Collection, Artistic Director Nigo expands his lens and imagines the cross-cultural core of the Kenzo season wardrobe from a galaxy far away. Nodding at solar motifs, the characteristic plissé soleil dress takes center stage alongside workwear crafted in the Kenzo Weave pattern influenced by those of Japanese hakeshi baten fireman’s jackets, which infuse the collection with a hand-spun, rooted sensibility. Cargo flight trousers and a metallic sequined body further embrace an on-land idea of space travel, echoed in a starry logo T- shirt. It features one in a series of Kenzo Constellation prints, which imagine the iconography of the Maison from the point of view of the stargazing earthling, conveying the Rue Vivienne logo and the boke flower in stellar patterns. Finally, a Kenzo Business ideogram of five briefcase-carrying men pays tribute to the merchandise of Japanese electronic band YMO, heralding the main collection. In the Philippines, Kenzo is exclusively distributed by Stores Specialists, Inc., located in Greenbelt 3. Visit ssilife.com.ph or follow @ssilifeph on Instagram for more information.

Addressing barriers to health literacy

FREEPIK

Many Filipinos have limited health literacy which can hinder their ability to effectively manage their health, according to the National Health Literacy Survey (NHLS), the first nationwide survey on the prevalence of health literacy in the Philippines.

Health literacy is the degree to which individuals have the ability to find, understand, and use information and services to inform health-related decisions and actions for themselves and others. Low health literacy is associated with more hospitalizations, greater use of emergency care, decreased use of preventive services, poorer ability to interpret labels and health messages, poorer health status, higher mortality, and higher healthcare costs. On the other hand, a high level of health literacy among the general population can reduce sickness (morbidity), death (mortality), and disability, as well as enhance health equity.

The NHLS is a project of the Department of Health (DoH) in cooperation with the Philippine Council for Health Research and Development, an attached agency of the Department of Science and Technology. Results of the survey were published in the April 2022 issue of the peer-reviewed journal Health Literacy Research and Practice.

Conducted by the College of Public Health Foundation of the University of the Philippines-Manila, the cross-sectional nationwide survey involved 2,303 randomly selected Filipinos aged 15 to 70 years. The mean age of the respondents was 40, and the majority were women (74%), urban residents (70%), married (55%), Catholic (79%), and not gainfully employed (52%).

The NHLS used an adapted Asia version of the European Health Literacy Survey Questionnaire that measured the components of health literacy, including its dimensions (ability to access, understand, appraise, and apply health information) and domains (healthcare, disease prevention, health promotion).

The survey showed that the nationwide prevalence of limited health literacy is 51.5%, with the National Capital Region (NCR) having the highest prevalence (65.4%) and Luzon the lowest prevalence (48.2%).

The nationwide prevalence of limited health literacy was higher for accessing (45.9%) and appraising (43.8%) health information, compared to understanding (35.8%) and applying (35.7%) health information. This was the same pattern seen in Luzon and the Visayas. In NCR, the dimension with the highest prevalence of limited health was appraising health information, while in Mindanao it was applying health information.

Across domains, the nationwide prevalence of limited health literacy was highest in healthcare (50.9%) and consistent across the subnational levels. The study authors Tolabing et al noted that the NCR has the highest prevalence of limited health literacy in all three domains.

The proportion of limited health literacy increased with age, whereas it decreased with increasing level of educational attainment among respondents — findings that reflect the influence of formal education on health literacy by imparting health-related knowledge and forming skills essential for engaging with sources of information, the study authors explained.

Respondents without health insurance had the highest proportion of limited health literacy, which according to the study authors, may denote that the complexity of insurance information and enrolment procedures may hinder those with limited health literacy to obtain health insurance. Additionally, those without insurance have less use of health services due to higher out-of-pocket medical expenses. This lack of experience with the healthcare system may lead to limited engagement with health information and consequently limited health literacy.

Respondents without a relative with a medical background had a higher proportion of limited health literacy than those with relatives with medical background. The study authors noted that a health professional in the extended family may readily share health-related knowledge and persistently remind one of healthy behaviors. The nuanced spillover of health expertise may consequently lead to higher health literacy in their family members.

According to the study, the substantially higher prevalence of limited health literacy in NCR (65.4%) compared to Luzon and Mindanao implies differences in health promotion activities and their effectiveness and in health system demands. They cited reported variations in the quality of health services in different local government units at least partly due to the devolved health system. They also acknowledged the DoH’s recognition of the need to train health professionals on health promotion via field training facilities to ensure the standard delivery of health promotion services.

The study said it was noteworthy that health information access had the highest prevalence of limited health literacy considering that the process of engaging with sources of health information begins with accessing health information, which will trigger the rest of the steps, namely, understanding, appraising, and then applying the health information.

On the other hand, the highest prevalence of limited health literacy in healthcare implies that engaging with information about healthcare is more difficult than is the case with disease prevention or health promotion. Moreover, verbal health information from health providers on healthcare may be less understood than that of other domains. The reasons may include limited time available for health provider-patient interaction or communication skills of the health provider, the study authors explained.

The study authors concluded that the NHLS results highlight the need for targeted interventions focusing on specific population subgroups with limited health literacy and on improvements in the information access dimension and in the healthcare domain of population health literacy. Since the task of health literacy is too important, no one sector can do it alone. Therefore, public-private partnerships will be helpful in tackling health literacy to improve health.

 

Teodoro B. Padilla is the executive director of Pharmaceutical and Healthcare Association of the Philippines (PHAP). PHAP represents the biopharmaceutical medicines and vaccines industry in the country. Its members are in the forefront of research and development efforts for COVID-19 and other diseases that affect Filipinos.

World food prices steady in June, UN says

REUTERS

ROME — The United Nations (UN) world food price index held steady in June, with increases in the indices for vegetable oil, sugar and dairy products balanced out by a fall in the price of cereals.

The UN Food and Agriculture Organization’s (FAO) price index, which tracks the most globally traded food commodities, averaged 120.6 points in June, unchanged from May.

The May reading was revised after initially being given as 120.4.

Prior to June, the FAO index had risen for three consecutive months after hitting a three-year low in February as food prices receded from a record peak set in March 2022, following Russia’s invasion of fellow crop export major Ukraine.

The June value was 2.5% down on its level one year ago and 24.8% below its 2022 high point.

In a separate report, FAO raised its forecast for global cereal production in 2024 by 7.9 million tons (+0.3%), putting it at 2.854 billion tons, up fractionally from 2023 levels and marking a new all-time high forecast. — Reuters

Audi Philippines holds midyear financing promo for e-tron models

Audi Q8 e-tron — PHOTO FROM AUDI PHILIPPINES

AUDI PHILIPPINES is extending financing options on select models — more notably on its electric Audi e-tron offerings: the Audi Q8 e-tron and the Audi e-tron GT. The midyear promotion is expected to feature easy-pay packages and other offerings to make these Audi models more attainable.

The Audi Q8 e-tron is said to be a model that combines “powerful electric performance with sophisticated design.” Boasting a dual-motor setup, the Q8 e-tron delivers sprightly acceleration and a smooth, quiet ride. Its spacious cabin features leather upholstery and an advanced infotainment system. The Q8 e-tron, said Audi Philippines, is suitable for both city commutes and long-distance travel, with advanced safety systems and driver assistance assuring safety and peace of mind.

Meanwhile, the Audi e-tron GT marries “sporty aesthetics and cutting-edge technology.” Its high-performance electric powertrain delivers “exhilarating acceleration, precise handling, and a dynamic driving experience.” Audi Philippines says that a sport-tuned suspension and aggressive styling set it apart, while a “meticulously crafted interior provides a luxurious atmosphere.” An advanced infotainment system, premium materials, and customizable settings ensure a heightened driving experience. The e-tron GT also incorporates the latest in driver assistance technologies.

For more information, contact Audi Philippines at 0917-836-1479.

PSEi member stocks performed — July 5, 2024

Here’s a quick glance at how PSEi stocks fared on Friday, July 5, 2024.

Peso may rise on rate cut view

BW FILE PHOTO

THE PESO may continue to rise against the dollar this week amid rate cut bets at home and abroad following slower-than-expected Philippine headline inflation in June and data showing a cooling US jobs market.

The local unit closed at P58.53 per dollar on Friday, strengthening by five centavos from its P58.58 finish on Thursday, Bankers Association of the Philippines data showed.

This was the peso’s strongest showing in almost a month or since its P58.52-a-dollar finish on June 7.

Week on week, the peso likewise rose by eight centavos from its P58.61-per-dollar close on June 28.

Slower Philippine June inflation supported the peso on Friday, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The June consumer price index (CPI) print strengthened the case for a Bangko Sentral ng Pilipinas (BSP) rate cut by next month, Security Bank Corp. Chief Economist Robert Dan J. Roces said in a Viber message.

Headline inflation eased to 3.7% year on year in June, from 3.9% in May and 5.4% in the same month a year ago, the Philippine Statistics Authority reported on Friday.

This was within the BSP’s 3.4-4.2% forecast for the month and was slightly slower than the 3.9% median estimate in a BusinessWorld poll of 14 analysts. This also marked the seventh straight month that the CPI settled within the BSP’s 2-4% annual target.

The June CPI matched the 3.7% print in March and was the slowest in four months or since the 3.4% recorded in February.

For the first half, Philippine headline inflation averaged 3.5%, above the central bank’s 3.3% full-year forecast but still within its 2-4% annual goal.

BSP Governor Eli M. Remolona, Jr. earlier said the Monetary Board is “on track” and “somewhat more likely than before” to slash rates at its Aug. 15 policy meeting as he expects inflation to further ease this semester with the implementation of lower tariffs on rice.

For this week, the peso’s movement against the dollar will be driven by US nonfarm payrolls data released on Friday, Mr. Roces said.

US employment increased solidly in June, but government and healthcare services hiring made up about three-quarters of the payrolls gain and the unemployment rate hit a 2-1/2-year high of 4.1%, pointing to a slackening labor market that keeps the Federal Reserve on course to start cutting interest rates soon, Reuters reported.

Mr. Ricafort added that the market will also monitor June US consumer and producer inflation data to be released this week, as well as Fed Chair Jerome H. Powell’s semiannual testimony before the US Congress, which could provide hints on the US central bank’s policy path.

He expects the peso to move between P58.40 and P58.60 versus the dollar this week. — AMCS with Reuters

Slower inflation, rate bets to drive up PHL stocks

BW FILE PHOTO

PHILIPPINE SHARES are expected to rise this week as slower headline inflation in June strengthened the case for a Bangko Sentral ng Pilipinas (BSP) rate cut within the year, analysts said.

The Philippine Stock Exchange index (PSEi) fell by 0.22% or 14.74 points to close at 6,492.75 on Friday, while the broader all shares index went down 0.19% or 6.88 points to end at 3,508.99.

Still, week on week, the PSEi climbed by 1.26% or 80.84 points from its 6,411.91 finish on June 28.

“The local market was able to close higher last week despite episodes of profit taking in the start and end of the week. We’re seeing a buildup of upward momentum as the market was able to maintain its ground above 6,400 and at the same time break above its 50-day exponential moving average,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message over the weekend.

“The market sustained its recovery, further boosted by the lower inflation print for the month of June,” online brokerage 2TradeAsia.com said in a market report.

For this week, Mr. Tantiangco said the slower-than-expected June inflation print may give Philippine stocks a boost.

“The latest inflation data is seen to be supportive of prospects of a rate cut soon by the Bangko Sentral ng Pilipinas, which in turn is positive for the market,” he said.

Philippine headline inflation rose to 3.7% year on year in June, easing from 3.9% in May and 5.4% in the same month a year ago.

This was within the BSP’s 3.4-4.2% forecast for the month and was slightly slower than the 3.9% median estimate in a BusinessWorld poll of 14 analysts. This also marked the seventh straight month that the consumer price index (CPI) settled within the BSP’s 2-4% target band.

BSP Governor Eli M. Remolona, Jr. earlier said the Monetary Board is “on track” to deliver its first rate cut in over three years at its Aug. 15 meeting as they expect inflation to continue easing this semester.

“Investors are also expected to watch out for the US’ June inflation print, which would provide clues on the Federal Reserve’s policy direction,” Mr. Tantiangco added.

“More recent hawkish comments from the Fed point to a no cut in July, but the admission of disinflation and latest Fed minutes showing concern over the impact of elevated rates are suggesting a potential crack in September,” 2TradeAsia.com said.

June US CPI data will be released on Thursday, July 11.

Traders of federal funds futures saw a roughly 77% probability of a rate cut at the Fed’s Sept. 17-18 meeting, according to CME Group’s FedWatch tool, Reuters reported.

The Fed has maintained its benchmark overnight interest rate in the current 5.25%-5.5% range since last July.

Mr. Tantiangco put the PSEi’s support at 6,400 and resistance at 6,700, while 2Trade-Asia.com placed support at 6,350 and resistance at 6,600. — S.J. Talavera with Reuters

Free trade negotiations with UAE expected to wrap up by October

REUTERS

THE PHILIPPINES hopes to conclude negotiations with the United Arab Emirates (UAE) on their proposed Comprehensive Economic Partnership Agreement (CEPA) as early as October, the Philippine Exporters Confederation (Philexport) said.

In a bulletin, the association quoted Trade Undersecretary Allan B. Gepty as saying that he hopes to finish talks with the UAE before the year ends.

“Our agreement with the UAE is to conclude the negotiations within the year. We’re looking at October or November,” Mr. Gepty said.

The Philippines and the UAE planned four full rounds of face-to-face negotiations aside from virtual meetings to move things along. 

“The first round was held in May 2024, and they are now set to conduct the second round, focused on market access negotiations, from July 8 to July 10 in Manila,” he added.

CEPA is a free trade agreement (FTA) aimed at expanding trade and investment opportunities with the UAE and the greater Gulf region.

In December, the Philippines and the UAE signed the terms of reference for the CEPA, setting guidelines for the conduct of the negotiations and the scope and coverage of the FTA.

The Departments of Agriculture, Labor and Employment, and Environment and Natural Resources, the Tariff Commission, Board of Investments, and the Bureau of Customs are joining the talks as negotiations progress. 

“Working groups are being created to negotiate the relevant chapters of the ToR, which include trade in goods, rules of origin, trade in services, digital trade, customs procedures and trade facilitation, investment, intellectual property rights, and trade and sustainable development,” it added.

The Department of Trade and Industry (DTI) said it sees opportunities to access the UAE market for halal-related products, tropical fruit, garments, and high-end finished consumer goods.

“Some of the Filipino food and other agri-based products with unrealized export potential in the UAE include banana, desiccated coconut, coconut oil, pineapple, and raw cane sugar. Also with much potential are personal care products, including perfumes and eye makeup,” it added.

Tradeline Philippines reported that total trade between the Philippines and UAE grew 5% to $1.9 billion in 2023.

“If realized, the PH-UAE CEPA will be the first FTA of the Philippines with a member state of the GCC (Gulf Cooperation Council) and in the entire Middle East,” Philexport said.

“It will also be the Philippines’ fourth bilateral FTA after the Philippine-South Korea FTA signed in 2023, the Philippines-Japan Economic Partnership Agreement in 2006, and the Philippine-European Free Trade Association FTA in 2016,” it added. — Justine Irish D. Tabile

Doubts raised about Dalian train arbitration

PHILSTAR FILE PHOTO

DOUBTS have been expressed about the prospects of the Transportation department’s plan to seek an arbitration ruling against Chinese train maker CRRC Dalian Co. Ltd.

“Arbitration on the Dalian trains will have a poor chance of success. The railcars have been with the DoTr for the last eight years, during which time they have plenty of time to return the cars or seek a refund. Arbitration (only means) more income to foreign consultants,” Rene S. Santiago, former president of the Transportation Science Society of the Philippines, said via Viber. 

The Department of Transportation (DoTr) is considering seeking an arbitration ruling against CRRC, Transportation Secretary Jaime J. Bautista said on the sidelines of an event last week. 

“There will be liquidated damages because they were unable to meet our requirements. But of course, subject to agreement. We should be fair and reasonable in terms of what should be collected from Dalian,” Mr. Bautista said.

“There’s a possibility that this leads to arbitration. In fact, I am seeing that this leads there.” 

The possible pursuit of arbitration could go forward before the planned privatization of the operations and maintenance of Metro Rail Transit Line 3 (MRT-3), which is expected by 2025. 

The government procured the Dalian trains in 2014, with deliveries taking place in 2016. The trains were expected to increase the capacity of the MRT-3 to 800,000 passengers daily. 

Mr. Bautista said that the Dalian trains were too heavy to use the MRT-3 tracks.

Operating them “would result in higher maintenance costs and would also result in higher operating costs,” he said. 

For now, the DoTr is still working with the Chinese train maker to determine how to operate the trains for the MRT-3. 

Earlier, the DoTr said it is hoping to auction the operations and maintenance contract for MRT-3 by 2025.

The private rail line concessionaire may still opt to use the rail cars once it takes over the operations and maintenance of MRT-3, Mr. Bautista said, adding that one of the proponents has submitted a proposal detailing how to operate the Dalian trains. 

“A private concessionaire can find ways to combine the Czech & Dalian trains efficiently by exploring parts standardization,” Mr. Santiago said. 

Nigel Paul C. Villarete, senior adviser on public-private partnership at the technical advisory group Libra Konsult, Inc., said having the concession holder come up with a solution to operate the unused trains would be a better option, rather than seeking arbitration. 

“If these trains can be used, I think we’d better use them rather than completely repudiate the purchase. They may want to do a full financial and economic comparative analysis on the options to take,” Mr. Villarete said via Viber.

However, he said that operating the unused trains once the private concessionaire takes over would entail higher maintenance costs, which can be passed on to consumers if viable. — Ashley Erika O. Jose

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